Videotron added more subscribers than expected to its mobile phone services in the spring in a context of persistently strong competition between the country’s main telecommunications companies.
A net increase of 94,000 mobile subscribers to Quebecor’s main subsidiary was recorded during the months of April, May and June. Analysts had expected an addition of 73,000 subscribers.
Since acquiring Freedom in April last year, Videotron has added more than 300,000 wireless subscribers, representing 9% growth over the past 12 months. “Nothing will stop us,” Quebecor CEO Pierre Karl Péladeau told analysts during a late-morning conference call Thursday.
PHOTO ROBERT SKINNER, LA PRESSE ARCHIVES
The big boss of Quebecor, Pierre Karl Péladeau
“The affordability of our mobile offering has been key to our market share growth since day one,” he added. “Videotron has not recorded such a large number of net new subscribers in a quarter since the purchase of Freedom.
Analyst Jérôme Dubreuil of Desjardins Securities points out that Quebecor finished second in the sector in terms of growth in revenues from wireless services for the spring quarter, behind Rogers.
“Anti-competitive” tactics
A year after acquiring Freedom, Pierre Karl Péladeau believes that the company he leads has succeeded in “fostering real competition in the industry, leading to a drop in wireless service prices for the benefit of the entire Canadian population.”
But for Videotron to continue building its 5G network across Canada, he believes that the regulatory framework for virtual mobile network operators must allow them to compete “fairly” with Bell, Telus and Rogers, which are deploying tactics that he considers “anti-competitive.”
“Regulatory authorities must act promptly and establish appropriate policies and rates adapted to the current market context,” says Mr. Péladeau.
I must denounce Bell’s continued and systematic obstruction of finalizing our contractual agreements. [d’exploitant de réseau mobile virtuel] with them. Our main competitor is unduly delaying a situation that should have been resolved long ago, forcing us to pay even more outdated and unfair rates.
Pierre Karl Péladeau, CEO of Quebecor, in a conference call
“We call on the CRTC to resolve this situation quickly so that we can all continue our activities and provide healthy competition, as required by the Canadian government and authorities.”
Bell says it has tried several times to reach an agreement with Quebecor since the CRTC issued its decision last October.
“The tariff and the decision clearly indicate that the agreements [d’exploitants de réseaux mobiles virtuels] will come into effect after the parties have reached a written agreement. Quebecor has refused. In the meantime, they continue to access our network through existing roaming agreements,” says Bell spokesperson Caroline Audet.
A mobile virtual network operator is a reseller that obtains the right to use a host company’s network to offer its services. Videotron has notably extended the service offerings of Freedom and Fizz to Manitoba and other regions of the country through mobile virtual network operator agreements.
Action assessment
Quebecor reported revenues down 1% to $1.38 billion in the spring quarter, 1% below market expectations. However, earnings before interest, taxes, depreciation and amortization of $625 million for the quarter, up 3%, were above analysts’ expectations of 3%.
Adjusted earnings per share of 89 cents, up 12% year-over-year, also beat the analyst consensus of 83 cents per share.
Quebecor also renewed its public share repurchase offer for cancellation for a maximum of 4.5% of the shares outstanding.
If the recent appreciation of Quebecor’s stock on the stock market is to be believed, investors seemed to be anticipating an interesting financial performance. The stock had gained 15% since the low reached a month ago in Toronto. The surge continued during Thursday’s session with an additional increase of 4%.